Small firms suffer in economic slowdown

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The Independent Online

Small and medium-sized manufacturers are being hit hard by the global slowdown, with export optimism among small firms falling to its lowest level since October 1998, according to a study by the CBI.

Small and medium-sized manufacturers are being hit hard by the global slowdown, with export optimism among small firms falling to its lowest level since October 1998, according to a study by the CBI.

The study, conducted in June and July, shows that 43 per cent of small and medium-sized enterprises (SMEs) were less optimistic about the general business situation. Just 15 per cent felt more confident. The balance of minus 28 compares with minus 30 in April.

Total new orders for small firms fell further over the past four months, by more than expected. Demand is expected to fall further in the next four months although less sharply. However, medium-sized enterprises are expecting orders to recover. Export orders fell at their sharpest rate since July 1999.

Simon Bentley, vice-chairman of the CBI's SME council, said: "SME manufacturers are facing extreme pressure from the global slowdown. They continue to experience falling orders whether they are suppliers to large UK manufacturers or directly to US or international companies. Although the latest cut in interest rates may avert further declines in confidence, SMEs are reliant on an improvement in the global market for an upturn in business and an increase in investment."

Output among SMEs fell at its sharpest rate since October in the four months to July. Investment plans for plant and machinery weakened and employment continued to fall at a quicker rate than predicted in the CBI's April survey.

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